CONTRACT MANAGEMENT IN SHELL

Transcription

1 CONTRACT MANAGEMENT IN SHELL NEVI Management Dag 14 Amersfoort Coen Wilms Group ing Discipline Manager

2 DEFINITIONS AND CAUTIONARY NOTE The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement "Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this announcement refer to companies in which Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this announcement, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 23 per cent. shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest. This announcement contains forward looking statements concerning the financial condition, results of operations and businesses of Shell and the Shell Group. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell and the Shell Group to market risks and statements expressing management s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from those expressed in the forward looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward looking statements. Additional factors that may affect future results are contained in Shell's 20-F for the year ended 31 December 2011 (available at and ). These factors also should be considered by the reader. Each forward looking statement speaks only as of the date of this announcement, 11. Neither Shell nor any of its subsidiaries nor the Shell Group undertake any obligation to publicly update or revise any forward looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward looking statements contained in this announcement. Shell may have used certain terms, such as resources, in this announcement that the SEC strictly prohibits Shell from including in its filings with the SEC. U.S. investors are urged to consider closely the disclosure in Shell's Form 20-F, File No , available on the SEC website You can also obtain these forms from the SEC by calling SEC-0330.

3 CONTRACT MANAGEMENT IN SHELL Introduction How contract management fits within procurement Shell s contract management principles Q&As

4 ROLE OF CONTRACTING & PROCUREMENT

5 CATEGORY MANAGEMENT & CONTRACTING PROCESS Planning And Appraisal Business Needs Market Analysis Supply Chain Cost Modeling Strategy Selection Sourcing & Award Management Requirement (wants & needs) Delivery Commitment options Value & improvements Suppliers Delivery Mgmt Plan Resources (Staff & Budget) HSSE, Business Ethics and Compliance, Sustainable Development

6 CONTRACT MANAGEMENT PROGRAMME Key principles: o Efforts fully integrated with the Business o Aligned/integrated with parallel category & supplier management programmes Four primary contract management themes: Focus on Performance (outcomes) Improve Management Competencies (educate) Focus on Compliance (balance) Simplify Management (ESSA) Safe operations Value add Reduced cost Compliance

7 CONTRACT SEGMENTATION Segment and manage spend to efficiently drive value Segment and manage contracts to efficiently deliver contracted value Complex Spend and Engineered Solutions Commodity Spend Strategic Total Spend $60+ Bn Tail Spend Tactical Operational contracts

8 ROLES IN CONTRACT MANAGEMENT Owner - resourcing, budget Holder - accountable for all elements of contract management Management Team to support Holder, including e.g. - CP representative - Finance representative - HSSE representative - Quality representative Owner Holder Management team

9 CONTRACT MANAGEMENT TOP QUARTILE Five Top Quartile elements: Shell resourcing HSSE management Management actions Commercial housekeeping or delivery All with both foundation and continuous improvement sub-elements

10 MODEL CONTRACTS LIBRARY Introduction of a Group wide Model s Library (rather than >10,000 different contract forms) Compulsory for all contracts related to purchases of goods and services, including complex projects Kept centrally and updated once per annum for any major changes Exceptions will require approval from Legal Considered fair and meanwhile well accepted in industry Removes a lot of waste and reduces time spent on drafting

11 CONTRACT MANAGEMENT PERFORMANCE Effective Management will make a difference it s up to you! Value Good Poor result due to improper Performance & Relationship Management Poor Initiate Start-Up Manage Performance & Relationship Close-Out

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